Drager Medical drags government to court

Font Size

Print

Feedback

Email

Discuss

New Delhi, Oct 11: Drager Medical AG & Co KgaA has challenged government decision to reject its proposal of setting up a wholly-owned subsidiary on the ground of Press Note 18.

Drager, in its application to the Delhi High Court, has alleged that similar proposals of Honeywell Inc and Yokogawa Electric Corp have been cleared by the government, despite objections raised by their respective Indian partners which had evoked Press Note 18.

Drager has requested the court “to direct the defendant no. 1 (the Union of India) to file an affidavit clarifying as to how the aforesaid two cases of the joint ventures of Honeywell and Yokogawa are different from the instant case of the applicant (Drager Medical).”

The German company Drager Medical is a joint venture between Dragerwerk Ag and Siemens AG. The company has proposed to set up a wholly-owned subsidiary in India, Draeger Medical (India) Pvt Ltd. The company proposes to manufacture and sell anaesthesia equipment, medical emergency equipment and other specialised equipment meant to be used in different medical profession and treatment.

Foreign Investment Promotion Board (FIPB) had rejected Drager Medical’s proposal on a complaint filed by RKKR Infotech.

“We have received communication from RKKR Infotech expressing their strong reservation against your proposal in the light of the existing joint venture company, Usha Draeger Pvt Ltd,” FIPB communicated Drager Medical and directed it to obtain a no-objection certificate (NoC) from Usha Draeger. The German firm Draegerwerke Aktienges-sellschaft has a 50% equity in Usha Draeger, which manufactures anaesthetic apparatus, baby warmer, incubators.

On the issue of Draegerwerke Aktiengessell-schaft, having 50% equity stake in Usha Draeger, Drager Medical said in its application that “the Press Note 18 (1998 series) nowhere refers to the same being applicable to any ‘group entity’ having tie-ups/ventures in India”. It categorically stated in the application that Drager Medical is “not even a group company of Draegerwerke Aktiengessellschaft.”

“The applicant is not a ‘Drager group company’ but a ‘Drager and Siemens Company’.”

The present application has been filed in the court, citing examples of two cases which were cleared by FIPB, ignoring the provisions of Press Note 18.

According to the application, Honeywell has been allowed to set up a 100% subsidiary to manufacture cores and lamination of amorphous metals alloy despite objection raised by RKKR Infotech. RKKR Infotech and Honeywell have a JV in similar line of business.